Long term care insurance for multiple lives will be an increasingly important part of LTC insurance sales, predicted Lynn Hartung, executive vice president and chief operating officer for the long term care division of Transamerica Inc.
In a panel discussion during the Eighth Annual Intercompany Long Term Care Insurance conference here, Hartung saw several factors leading to increasing sales for multi-life LTC, including the fact that employers still need to recruit exceptional employees, and hence need to offer exceptional benefits. Moreover, workers are becoming increasingly accustomed to buying voluntary workplace benefits, a fact that also will work to boost multi-life’s share of the business, Hartung said.
Unlike group insurance, not all employees in a given workplace can qualify for a multi-life LTC policy. However, multi-life sales are suitable for groups as small as 3 people and they do offer discounts from premiums for regular individual LTC policies, noted another panelist, Beth DeMartino, assistant vice president of operations for MetLife Inc.’s individual LTC products. This opens up sales to small, often family-owned businesses. They enable producers to offer LTC policies in a variety of formats, from a strictly voluntary benefit to executive carveouts, and split-billing arrangements where employers will buy a base plan from which employees can buy up or one in which the employer pays fixed percentage of the premium for a choice of plans.
Sales for multi-life were up 7% last year compared to the year before, DeMartino noted, citing data from LIMRA International, Windsor, Conn.
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Typical participation rates per employer are 1% to 10% of an eligible workforce, she said. Optimal group size ranges from 3 to 200 eligible employees, she added.
For a successful multi-life enrollment, producers should look for an employer that will encourage participation by allowing enrollment meetings during regular work hours and facilitating marketing efforts, such as mailings to employees’ homes, said DeMartino. Also, defined enrollment periods, such as 90 days, tend to encourage more enrollments than do open-ended enrollments, she added. Offering a single carrier also will be more successful than offering a choice of carriers.
The advantages of multi-life over individual policies include lower cost, with discounts ranging from 5% to 15% compared to individual policies. In a typical workforce, this would mean an individual annual premium of $1,800, vs. $2,000 for individuals, she said.